The bull market, one of the longest in history, had showed no signs of slowing in mid-February. But within a few short weeks, the coronavirus stopped it in its tracks.
Interestingly, previous pandemics did not create such an economic disruption in the global economy. But with trade and supply chains so interconnected, and with the unprecedented containment response from countries and individuals shuttering businesses and keeping people at home, the economy has taken a hit.
For perspective, this was the fastest we’ve ever seen a bull market turn into a bear.
But unlike other bear markets, this one did not come about due to a slowing economy. In fact, prior to the outbreak, we arguably had the strongest economy of our lifetime with 50-year low unemployment, 20-year high in household income, near record high in consumer confidence, and record high corporate profits.
Fortunately, since the U.S. was in such a strong position going in to this, it’s all the more likely we’ll bounce back in record time.
Add in the trillions of dollars of aid and stimulus packages injected into the economy, not to mention near zero interest rates, and stocks are poised to soar once the worst of this is behind us.
In fact, stocks have already surged from their lows on hopes that the outbreak will reach its peak by mid-April. And if that comes to pass, we could see our economy begin to open shortly thereafter.
Continued . . .
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Four experts each announce their single favorite stock with the best upside for the quarter ahead. One is a recent IPO that’s protected from the current crisis, serving a rampantly growing online market. Doing well now, it looks to skyrocket once the pandemic subsides.
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Fastest Bear, Fastest Bull
While this was the fastest bear market we’ve ever seen (it took just 19 days for the Dow to drop by more than -20% from its highest close), it also just became the fastest bull market in history by gaining more than 20% from its lowest close in just 3 days!
After dropping as much as -38.37% at its lowest point, stocks then shot up by 21.30% over the next 3 days, officially exiting bear market territory on March 26th.
All in all, the Dow’s bear market lasted only 11 days. And is now in a new bull market.
For the record, the S&P and the Nasdaq have not yet exited their bear market. The S&P ‘only’ closed as high as 17.55% from their lowest close, while the Nasdaq only closed up 13.66%.
But it’s highly likely that these two benchmarks will eventually follow the Dow. And given all of the above, that could be much sooner rather than later.
The unprecedented speed on the way down is only being matched by the unprecedented speed on the way up.
That’s in stark contrast to other bears.
Then And Now
The top 10 worst bear markets (using the Dow), following the Great Depression, shows that it declines on average by -39.27%. And it lasts on average of 16.9 months.
For comparison, the Dow at its worst during this bear market was down by -38.37%, the S&P was down by -35.27%, and the Nasdaq was down by -32.45%.
Not that far from the average.
The rallies that follow bear markets, however, have been even bigger. Within a year after a bear market, stocks surge on average of 44.74%. And go on to gain on average 66.34% by year 3.
And following the Great Recession in 2007-2009, the market gained 63.40% in year 1; 100.58% by year 3; 153.58% by year 5; and more than 357% during the entire 11+ year bull market.
While there’s likely to be more volatility in the coming weeks and months, now is the time to start building your list of dream stocks.
You don’t have to go all in at once. But you can start taking nibbles at these discounted prices.
Some may go lower. And some may not. But they are likely much lower now than where they were just a few short weeks ago. And much closer to the bottom (if they haven’t already hit it).
That’s true for your favorite stocks. As well as new stocks that you probably haven’t even heard of yet.
Because this virus outbreak, and the upheavals it’s brought about for businesses and consumers, will usher in plenty of new and exciting opportunities in the inevitable bull market that follows.
Do What Works
The best way to find the new market leaders is to stick with time-tested methods that work.
For example, did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 26 of the last 32 years with an average annual return of 24.5% per year? That's nearly 2.5 x the S&P with an annual win ratio of more than 81%.
That includes 2 bear markets and 3 recessions.
Did you also know that stocks in the top 50% of Zacks Ranked Industries outperform those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true!
Those two things will give any investor a huge probability of success and put you well on your way to achieving your investment goals.
But you’re not there yet, as those two items alone will only narrow down a field of 10,000 stocks to the top 100 or so. Way too many to trade at once.
So the next step is to get that list down to the best 5-10 stocks that you can buy.
Proven Profitable Strategies
Picking the best stocks is a lot easier when you focus on proven, profitable strategies to do it.
And by concentrating on what has proven to work in the past, you’ll have a better idea as to what your probability of success will be now and in the future.
One of the best ways to begin picking better stocks is to see what the pros are doing.
Whether you’re a growth investor, or a value investor, prefer fast-paced momentum stocks, or mature dividend-paying income stocks, there are certain rules the experts follow to maximize their gains.
This applies to large-caps and small-caps, biotech and high-tech, ETF’s, stocks under $10, stocks about to surprise, even options, and everything in between.
Regardless of which one fits your personal style of trade, just be sure you’re following proven profitable methods that work, from experts who have demonstrated their ability to beat the market.
The best part about these strategies is that all of the hard work is done for you. There’s no guesswork involved. Just follow the experts and start getting into better stocks on your very next trade.
Roadmap to Success
Nobody likes bear markets. But they can provide tremendous opportunity for getting into great stocks at fantastic prices.
Some may be tempted to tune out during these times. Don’t do it.
Now’s the time to stay engaged. That’s how you’ll stay ahead of the market.
There’s no need to reinvent the wheel. The path has already been created. Now it’s just about doing it.
And there’s never been a better time to find tomorrow’s winners today.
So make sure you take full advantage of it.
Where to Start
As we talked about earlier, one of the smartest ways to maximize your gains is to find out what the pros are doing and consider following along.
Here’s an easy way to do that:
Download our just-released Ultimate Four Special Report.
These are 4 stocks hand-picked by our experts. Each has strong fundamentals and exceptional growth potential for Q2.
They’re ideally suited to flourish in today’s stay-home market, and then soar as the coronavirus pandemic subsides and pent-up consumer demand is unleashed.
Stock #1: This recent IPO retailer is virtually immune to the coronavirus, serving a rampantly growing online market. Although held just under its all-time highs, it looks to skyrocket once the economy returns to normal.
Stock #2: Have you overlooked this top-quality, cash-rich tech juggernaut? Well positioned in today’s work-from-home environment, its revenue, profits, and earnings all look strong. Right now, its stock price looks ridiculously low.
Stock #3: A cybersecurity firm thrives in an industry that never sleeps, fighting crimes that are doubling from $3 trillion in 2015 to an expected $6 trillion by 2021. With a client base that works remotely, they’re set for growth now, and also when the crisis lifts in months to come.
Stock #4: It’s a semiconductor powerhouse with great leadership that’s at the right place at the right time. When you buy this stock, you’re investing in the massive coming growth of gaming, shopping, manufacturing, education, robotics, medicine, and more.
I suggest you beat other investors to the punch and download this Special Report today. Opportunity ends Sunday, April 5.
Look into our Ultimate Four stocks now >>
Thanks and good trading,
Kevin Matras serves as Executive Vice President of Zacks.com and is responsible for all of its leading products for individual investors. He invites you to download Zacks’ newly released Ultimate Four Special Report.